The Port of Pittsburgh Commission has its sights set on dry land, hoping to channel millions of dollars in low-interest loans to developers and other businesses in southwestern Pennsylvania.

In August, the commission announced that it would sell $28.5 million in bonds to provide a loan to the Cleveland-based Ferchill Group, which is developing a $46.5 million, 150,000-square-foot building at the Pittsburgh Technology Center in South Oakland, with the help of significant assistance from state and local government.

By using its tax-exempt status, the commission is able to offer more favorable loan terms than a developer could obtain on the open market.

The commission will own the land and building, which will be constructed with the sale of the bonds. Ferchill would take ownership of the building after paying off the loans with the revenue stream from the building's future tenants.

Executive Director James McCarville said the commission was given power to encourage economic development several years ago by the state legislature, in response to a similar move by the legislature in Ohio. But the Ferchill project was the first time it used the capability, he said.

The Ferchill project has caught the eyes of other companies; McCarville said the commission is currently in negotiations with several developers about possible projects in the future.

It's unclear what impact the commission's new economic development powers will have on the region, but one local developer said he hopes to utilize the financing source to draw investors to his building.

Tony Bucciero, president of East Pittsburgh-based Guardian Construction Management Services Inc., said he hopes to use the program to attract an investor to buy the 110,000-square-foot former Builders Square building in Braddock Hills.

Bucciero said many large companies would rather enter into a loan agreement with the Port Commission and take ownership of a building in the future rather than just buying the property outright.

"The bigger player would appreciate keeping (the property) off their books," Bucciero said.

Guardian and Strip District-based Madison Acquisitions purchased the property, in the Braddock Hills Shopping Center, for $550,000 earlier this year and are in the process of renovating it.

"The (commission) would provide the money for the acquisition and all improvements," Bucciero said, describing what he envisions as a similar deal to Ferchill's. "The (commission) can get an assortment of good loans from the state."

Still, the program does not come without risks, although they are minimized by the fact that the commission could sell the property to satisfy the debt to the bondholders in case of a default, said Don Smith, director of Carnegie Mellon University's Center for Economic Development.

"The property itself is security for the debt," Smith said.

The Regional Industrial Development Corp. of Southwestern Pennsylvania frequently acts as a similar conduit for low-interest loans for economic development projects. But Smith questioned whether, in the Port Commission scenario, the property would remain on the city's tax rolls prior to the developer paying off the loan.

McCarville said the plan is for the Ferchill property to stay on the tax rolls.

"The local community will get property taxes," McCarville said. "We don't want to create a lot of tax-exempt property for the local community base."

Regional Industrial Development Corp. Executive Director F. Brooks Robinson Jr. said that the market should determine how much need there is for such financing.

McCarville said he has had conversations with the RIDC and plans to partner with it on future projects. Furthermore, the port commission's charter allows it to be even more flexible than the RIDC, he said.

"Typically, the RIDC will only do a project in the area that they have projects," McCarville said. "We have no restrictions."

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